Over 11 million people have less than £1,000 in savings

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According to a report by the Resolution Foundation, one-in-three working age families (11.2 million) don’t have basic level ‘rainy day’ savings of at least £1,000

Over 11 million people in Britain do not have basic ‘rainy day’ savings of at least £1,000, as households with low savings are more likely to rely on credit cards, overdrafts, or borrowed money to meet their daily expenses.

According to a report by the Resolution Foundation, one-in-three working age families (11.2 million) do not have basic level ‘rainy day’ savings of at least £1,000. This rises to almost half of low-income families as the cost of living crisis makes it even harder to save money for emergencies.

Nearly 12% revealed they had less than £100 and 5% didn’t have any savings at all.

Families with low savings were more than twice as likely to have used credit cards, overdrafts, or borrowed money from formal lenders in order to meet their daily expenses compared to those with over £1,000 of savings.

Over half of working-age households in the UK (51% or 13 million) didn’t have savings worth three months of income, in case of major problems like unemployment, illness or relationship breakdown.

They would need to have a combined £74 billion extra saved up to meet that threshold, the think tank calculated.

Resolution Foundation said people should be able to “borrow” money out of their pension pot to cope with pre-retirement financial challenges.

To help achieve this, it proposed the creation of a “sidecar savings” scheme to be set up alongside workplace pensions.

It said that people should also be able to borrow money from their pension pots. Under the pension freedoms, people have to wait until the age of 55 to access their pots.

It also called for an increase in auto enrolment pension savings and letting savers borrow up to £15,000 or 20% from their pension pots to help them cope if they run into difficult circumstances. At present, none can be drawn down without penalties until the age of 55, increasing to 57 by 2028.

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